Swiss bank ZKB to see capital ratio boost from model switch

Reuters Staff

2 Min Read

ZURICH, Jan 25 (Reuters) - Swiss lender Zuercher Kantonalbank (ZKB) has switched to an internal model to measure credit risk as of the end of 2017, which will give its capital ratio a boost by pushing down risk measurements, it said on Thursday.

The bank did not give its exact end-of-year core capital ratio ahead of its results on Feb. 9, noting other factors will also determine the final figure. At mid-2017, ZKB’s common equity tier 1 ratio was 15.7 percent of risk-weighted assets.

Big banks UBS and Credit Suisse also use internal risk-measuring models, which under new international rules taking effect from 2022 may not undershoot capital requirements from standard models as much as they can now.

UBS has said its risk-weighted assets could rise by 35 billion Swiss francs ($37.6 billion) as a result of the new approach. It plans to top up its hard capital by 4 billion francs over the next three years to help fulfil the new regulatory demands. ($1 = 0.9302 Swiss francs) (Reporting by Angelika Gruber; Writing by Michael Shields; Editing by Hugh Lawson)